The Looting of Black People’s Wealth: From Land Grabs to Subprime Loans

The culmination of an 18 month investigation, AP’s three-part series revealed a systematic pattern in which blacks were “cheated out of their land or driven from it through intimidation, violence and even murder.”

The looting of black wealth began shortly after the Civil War and continues to this very day.

Tracking more than a century of land cases by searching through deeds, mortgages, tax records, estate papers, court proceedings, oil leases and Freedmen’s Bureau archives, the AP reporters were able to show how everyone from US government officials to Southern segregationist got in on the act of stealing land owned by blacks.

Notably, the reporters make a compelling case that the government either approved of the theft of black land or took part in the thievery.

This first phase of the looting of black wealth helps to explain the near century decline of black landownership in the US.

In 1910, blacks owned roughly 15 million acres of farmland, most of which was in the South. Black ownership of farmland (outright or partial) had dropped to about 2.7 million acres of farmland by 2001.

While many blacks gave up their land to escape Jim Crow segregation and escalating racist terrorism in the South or to pursue greater economic opportunity in the North during the Great Black Migration, thievery, nonetheless, played a big role in the decline of black landownership.

My family had land stolen from them too. My mother, who is in her 70s, always talks about how her uncle, a hardworking, but illiterate black man, saw land inherited from his parents taken by whites.

“White people took advantage of black people like my uncle because they could not read or write,” she would often tell me. “After my uncle borrowed money from whites and could not pay them back quickly enough, one day they came for the plow. The next time they came for the mule that used to pull the plow. Then, one day, they came for the house.”

Of course, the current owners of stolen black land claim ignorance about this history.

In truth, until the AP series ran, much of this history had been either conveniently ignored or simply overlooked.

According to articles in the July 14 edition of The Nation, the looting of black wealth has not ended.

According to The Nation, the subprime meltdown is disproportionately affecting people of color: the total loss of wealth for people of color could reach $213 billion, including $92 billion for blacks and $98 billion for Latinos.

Because the wealth of people of color is so heavily dependent on homeownership, the fallout from the possible loss of a home impacts more than one generation (remember, homes are often passed on to the next generation, which becomes instant wealth for the new homeowner).

As things stand, the black-white wealth gap is huge. According to Dedrick Muhammad, black families have a median net worth of $20,600, only 14.6 percent of the $140,700 median white net worth (Latino families have a median net worth of $18,600, only 13.2 percent of median white net worth). If you take home equity out of the picture, black net worth is only about 1 percent of that for whites.

How did blacks (and other people of color) find themselves in this predicament? Kai Wright’s article in The Nation, “The Subprime Swindle,” provides an explanation.

For starters, lending institutions came up with scams to “swindle” people of color, especially older, “house rich but cash poor,” blacks and Latinos out of their wealth. According to Wright, “… banks and brokers targeted vulnerable longtime homeowners and lured them into needless and rapidly recurring mortgages they clearly couldn’t afford and from which they never stood to gain.”

As an example, according to ACORN, more than half of all refinance loans made to blacks in 2006 were subprime, nearly twice the rate among whites. Nearly 2/3 of refinance loans for low-income blacks were subprime.

Moreover, when the housing market exploded in the early 2000s, investment bankers started to bundled pools of mortgages and sell them in the highly profitable securities market. When the lenders ran out of reliable borrowers, “undocumented loan applications, interest-only payment plans and teaser interest rates,” became the tools of the trade to swindle blacks and Latinos out of their wealth.

For much of this country’s history, homeownership has been the ticket for whites to the middle-class. For the last 40 years, it has been the ticket to middle-class stability for many black people. The subprime mortgage meltdown is undermining that progress. When it comes to finding a solution to the housing crisis, for blacks (and Latinos), then, the stakes are very high.

Unfortunately, given the structural nature of the problem, fixing this disaster will not be easy. When there is a governmental bailout for homeowners (there has to be one), there must be recognition of the special needs of homeowners of color. This is not simply needed; rather, it is absolutely necessary.